Netflix falls more than 9% after earnings

FAN Editor

Netflix missed its subscriber addition projections for the first time in five quarters, leading shares to tumble more than 9 percent.

The company reported second-quarter earnings after the market closed on Monday. Despite beating estimates on earnings, Netflix posted a huge miss on subscriber additions. The company added 5.15 million subscribers, about one million less than forecast. Domestic additions were only a little more than half than projected, while it also only added 4.5 million subscribers internationally.

Netflix reported:

  • Revenue: $3.91 billion vs. $3.94 billion estimated, according to a Thomson Reuters consensus estimate.
  • Domestic subscriber additions: 670,000 vs. 1.23 million subscribers estimated, per FactSet and Street Account
  • International subscriber additions: 4.5 million subscribers vs. 5.11 million subscribers estimated, per FactSet and Street Account
  • Earnings per share (EPS): 85 cents (including $85 million in non-cash unrealized gain)

Some analysts were worried the company could not sustain its share price growth, which is over 100 percent year-to-date. They also raised concerns as competitors like Amazon ramp up their streaming efforts, while others like Disney and AT&T are prepared to invest in more digital content. Netflix is expected to spend up to $8 billion this year on 700 original series.

Netflix also issued a weaker guidance for the third quarter than expected, saying it is expecting to add 5 million subscribers total compared to an analyst estimate of more than 6 million. It is projecting to add 650,000 in the U.S. and 4.35 million internationally.

This is breaking news. Please check back for updates.

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